Avoiding the Over-and-Under Gamble of Utility Expense Billing

The over-and-under of utility management billing has never been more relevant than now. Charging too much or too little to residents through flat-fee billing of water, sewer, trash and electricity is a gamble that property managers shouldn’t take today. The multifamily housing landscape has become ultra-competitive overnight as a result of recent events. Every dime for rent matters to residents, whose financial positions may have been compromised by economic uncertainties. Current economic conditions typically punctuate the need for accurate utility billing, an often unheralded part of renting that – even in good times – can be just as important to marketing a property as touting granite countertops. Flat-fee billing puts property at risk Estimating utility expenses through flat-fee billing can be a double-edged sword for properties that don’t allocate or sub-meter, industry experts say. A set $50 monthly fee on top of rent may sound good to a cost-conscious renter until it becomes apparent that not all of that money is going to pay for utilities because the property overestimated the underlying expense. A renter may become unhappy and find another property that has a more favorable utility recovery program. The fee may also be setting the property up for big losses if it is not covering the actual utility expense, which the property must pay. Even more, incorrect billing sets up a property for possible branding or legal scrutiny if bills are consistently inaccurate and laws and regulations aren’t followed. Some states have enacted stiff statutes that favor renters for recovery of payment for incorrect bills, a penalty that can cost properties tens of thousands of dollars. “The danger with flat-fee charges is you’re charging a fixed amount for utilities, and whenever you establish that amount to charge, you are always either over or under,” says Jeffrey Peterson, RealPage Vice President, Legal Counsel. “...